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CHINA HERALDED AS A PRIME MARKET FOR AFRICA’S AIRLINES
October 19, 2020
Ethiopian 777 iStock-1218867063
Ethiopian Airlines is positioned to be a major player in the African air cargo market, with 10 Boeing 777F and two Boeing 737-800 dedicated freighters, plus access to bellyhold space on 114 passenger planes.

Significant changes loom in the global air cargo market, with Asia and Africa being among those most likely to develop in new directions, the Africa Air Cargo Summit 2020 heard.

 

While the Covid-19 pandemic is forcing changes to how the industry operates, the ongoing need to diversify supply chains looks set to change where cargo flies to.

“There is a missing link,” Sanjeev Gadhia, chief executive officer of Nairobi-based all-cargo airline Astral Aviation told the webinar of the industry’s current problems. “No Chinese airline with the exception of China Southern flies into Africa, but we believe this trend is going to change.”

 

Gadhia did not provide a timeline nor name any new routes but stressed their strong likelihood. “We will actually see more point-to-point flights,” he said.

 

There is some solid evidence in support of this. During 2019, China was the biggest source of cargo inbound to Africa because of demand for phones and this year’s need to move pharma and PPE in response to the pandemic, which has seen increasing volumes from China to African hubs from China.

 

Where this argument is weak is in the economics sphere. Africa will take phones and consumer goods, but besides flowers and some fruit and vegetables, the trade is, at the moment, limited by the lack of carrybacks.

 

This imbalance stands to be corrected over time, but it may take decades rather than years. Some participants at the summit pointed out the emerging trend for manufacturing companies to move from higher-cost countries to lower-cost, closer countries such as those in Africa.

 

“I believe Africa will emerge much stronger from this,” said Stefan Pargfrieder, vice president for digital products and strategy, global air freight, at DB Schenker.

 

A number of implications flow from this, said Wilson Kwong, chief executive of Hong Kong Air Cargo Terminal (HACTL). “Global trade flows will become more diversified,” he said, adding this meant they would be “more complex” with more customers and more destinations.

 

In practical terms, this means more transhipment hubs and indirect routes need to be established, and more storage space, including at airports, will be required, he added. “Airports will need to increase their freight capabilities, including the need to train staff,” Kwong said. “Handlers will need to invest in front line technologies.”

 

Front line technologies such as e- and autonomous vehicles, as well as digitization, are very much seen as the way forward in a world which the summit felt was likely to see a more prominent and permanent role for e-commerce. This is very much a result of the pandemic, but one distinction was flagged by Steven Verhasselt, vice president, commercial and strategy, at Liege Airport.

 

Not only have more people learned to trust and embrace e-commerce, but businesses have also learned to trust e-commerce in the absence of trade fairs and the usual sales campaigns. “I honestly think the B2B (segment) will be more important than the B2C segment,” said Verhasselt.

 

One question overhanging everything is that of who will get the business? Africa-based airlines are keen to snap some of it up, and Fitsum Abadi, managing director for Ethiopian Cargo & Logistics Services pointed out that his airline is ready to step up.

 

Ethiopian is a hefty cargo operator with 10 Boeing 777-200s and two 737-800s, as well as the bellyhold capacity of its 114 passenger planes.

 

Abadi points to what is a paradox. Ethiopian carried 41.6% of the medical supplies moved from China to Africa during the pandemic, but of Ethiopia’s cargo exports as a country, the national airline moved only just over a tenth, with more than 80% being moved by non-African airlines.

 

The carrier is looking to expand and has China in its sights, but the market is big enough to support Asian carriers as well. Abadi sees e-commerce and pharma as “booming” – so much so that Ethiopian has established a pharma wing.

 

By Michael Mackey

Correspondent | Bangkok

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